Google to Acquire Yelp?

TechCrunch et. al, Friday, December 18, 2009 2:48 PM

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Google is in talks to acquire local review site Yelp, at a price that reportedly could surpass $500 million. "On the odds of the deal happening -- one source says it's 80% likely," reports TechCrunch. "Not signed, sealed and delivered, but past the term sheet stage."

According to The New York Times, "The two companies have had conversations for several years, but a more serious round of acquisition talks began two months ago."

What's really at stake for Google, asks blogger Robert Scoble. "Well, when you search for restaurants or businesses on Google, what do you see? Yelp reviews under many of those businesses. But if you are on the iPhone app Yelp makes, what else do you see? Offers from those businesses. THAT is a direct threat on Google's advertising business."

Om Malik says it's a good move for Yelp and its backers, because "they're about to be disrupted by a whole new class of more real-time and socially contextual services." He, of course, is talking about Twitter, location-based social network FourSquare, and others. He also thinks it's a good "short term move" for Google, "since it gives it a fighting chance to build a decent enough local business, something it's struggled with in the recent past."

"If Google does buy Yelp, what exactly does it get?" asks Search Engine Land. "It gets a local-social network with roughly 26 million users across the U.S., Canada and the UK. Yelp reportedly has 8.5 million reviews. This is a huge amount of content that Google can't generate itself and which it is already leaning on pretty heavily on its Place Pages as part of its increasing focus on local."

Noting that such a deal would advance Google's position in the local search marketplace considerably, VentureBeat's Deals & More blog writes, "For several months, Google has been rolling out enhancements to its Google Maps offering, including aggregated reviews from TripAdvisor, Citysearch and other sources."

Yelp's core asset is a dedicated community of commenters who dish on everything local from restaurants to stores, and are responsible for roughly 8 million reviews in 30 cities. That makes the potential buy a bit out of character for Google, which, according to MediaMemo, typically buys companies for their technology and people rather than their existing businesses, or the audiences.

Still, Google CEO Eric Schmidt said his company was getting back into M&A this fall, and that's exactly what he's done. "Say this for Eric Schmidt -- he's keeping his word," writes MediaMemo.

Indeed, if the deal does go through, Google will have executed seven companies since August, for what MediaMemo estimates is a total of $1.5 billion.

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